Labor Day 2019
Employers increase their profits and put downward pressure on wages and labor standards by exploiting migrant workers

Summary: Our current immigration system isn’t working for workers. Instead, it benefits low-road employers who exploit the immigration status of unauthorized immigrants and authorized guestworkers through a legal framework that puts downward pressure on wages and leaves migrant workers powerless to enforce their labor rights and hold employers accountable. This hurts both migrants and the U.S. workers—citizens and lawful permanent residents—who work alongside them. Congress needs to reform the U.S. immigration system by granting lawful permanent resident status to the current unauthorized immigrant population; revising temporary work visa program rules; enacting new protections from retaliation for migrant workers; appropriating more funding for labor standards enforcement; and permanently banning employers from hiring through temporary work visa programs if they have violated immigration or labor laws.

In recent decades, far too much of our immigration policy apparatus has ignored the interests of workers—immigrants and U.S.-born workers alike. This apparatus has instead been weaponized to suppress wages for employers’ gain. Immigration is an area of policy where a few simple solutions could result in major improvements to labor standards for all workers—but these solutions are blocked by low-road employers who benefit from today’s anti-worker system.

The employment relationship created by the visa programs leaves workers powerless to defend and uphold their rights.

To be clear, the challenge posed to U.S. workers is not the simple presence of migrant workers in the labor market; instead, it is the legal framework that makes these workers exploitable. A recent comprehensive study conducted by a number of prominent scholars for the National Academies of Sciences, Engineering, and Medicine found that levels of immigration have only very small impacts on wages and employment.1 However, in certain local labor markets and industries where a significant share of workers are migrants who do not have access to worker protections and basic labor rights—either because they are unauthorized immigrant workers or because they are migrants employed through nonimmigrant, temporary work visa programs (i.e., “guestworkers”)—the migrant workers’ lack of rights makes it difficult for them to bargain effectively for decent wages, and their weak leverage spills over to undercut the leverage of U.S. workers—i.e., citizens and immigrants who are lawful permanent residents.

Some industries have sought out unauthorized immigrant workers because of this vulnerability created by their lack of an immigration status. Various analyses of the August 2019 worksite raids on Mississippi poultry plants by U.S. Immigration and Customs Enforcement (ICE) have served to remind us of that fact.2 In the case of guestworkers, employers and industry groups spend millionslobbying to expand the number of exploitative visas that are available and to deregulate the rules governing those visas.3 In doing so, they are able to undercut the wage-boosting potential of a low unemployment rate and strong job growth.

How our immigration system can be exploited to suppress wages

Unauthorized immigrants are easily exploited by employers. Unauthorized immigrants, who make up nearly 5% of the U.S. labor force, contribute to the economy in vital industries and pay billions in taxes and contributions to the social safety net.4 But these eight million workers are not fully protected by U.S. labor laws because of their precarious immigration status: Unauthorized workers are often afraid to complain about unpaid wages and substandard working conditions because employers can retaliate against them by taking actions that can lead to their deportation. That also makes it difficult for unauthorized immigrants to join unions and help organize workers. This imbalanced relationship gives employers extraordinary power to exploit and underpay these workers, ultimately making it more difficult for similarly situated U.S. workers to improve their wages and working conditions.

The exploitation described here is not theoretical. A landmark study and survey of 4,300 workers in three major cities found that 37.1% of unauthorized immigrant workers were victims of minimum wage violations, as compared with 15.6% of U.S.-born citizens. Further, an astounding 84.9% of unauthorized immigrants were not paid the overtime wages they worked for and were legally entitled to.5

Migrant guestworkers are also vulnerable. One of the main authorized or “legal” pathways for migrants who want to work in the United States is via “nonimmigrant” visas that authorize temporary employment. The United States issues hundreds of thousands of nonimmigrant visas to workers from abroad every year in an alphabet soup of temporary work visa programs.6 Approximately 1.4 million guestworkers were employed in the United States in 2013 through work visa programs, accounting for roughly 1% of the labor force at the time.7 Although they are legally authorized to work, guestworkers are among the most exploited laborers in the U.S. workforce because the employment relationship created by the visa programs leaves workers powerless to defend and uphold their rights.

The abuses often start before guestworkers even arrive in the United States—many are required to pay exorbitant fees to labor recruiters to secure U.S. employment opportunities, even though such fees are usually illegal.8 Those fees leave them indebted to recruiters or third-party lenders, which can result in a form of debt bondage.9 After arriving in the United States, guestworkers may find out the job they were promised doesn’t exist.10 And in a number of cases, guestworkers have become victims of humantrafficking—with some being forced to workin the sex industry.11

It’s not just farmworkers and other lesser-skilled guestworkers suffering from the epidemic of fees, shady recruiters, and trafficking in temporary work visa programs: College-educated workers in computer occupations, as well as teachers and nurses, have been victimized and put in “financial bondage” by recruiters and staffing firms that steal wages and file lawsuits against workers if they try to quit.12

Temporary work visa programs have been dubbed “close to slavery,” and government auditors have noted that increased protections are needed for migrant guestworkers.

Guestworkers who are in debt are anxious to earn enough to pay back what they owe and hopefully make a profit, and are thus unlikely to rock the boat at work when things go wrong on the job. But even guestworkers who aren’t caught in the debt trap are still subject to exploitation once they are working in the United States. Like unauthorized immigrants, guestworkers have good reason to fear retaliation and deportation if they speak up about wage theft, workplace abuses, or other working conditions like substandard health and safety procedures on the job—not because they don’t have a valid immigration status, but because their visas are almost always tied to one employer who owns and controls their visa status. That visa status is what determines the worker’s right to remain in the country; if they lose their job, they lose their visa and become deportable. This arrangement results in a form of indentured servitude.13 Further, employers can punish guestworkers for speaking out by not rehiring them the following year or by telling recruiters in countries of origin that they shouldn’t be hired for other job opportunities in the United States (effectively blacklisting them).14

The spectre of retaliation makes it understandably difficult for guestworkers to complain to their employers and to government agencies about unpaid wages and substandard working conditions. Private lawsuits against employers who break the law are also an unrealistic avenue for enforcing guestworker rights, for two reasons: First, most guestworkers are not eligible for federally funded legal services under U.S. law, and second, guestworkers who have been fired are unlikely to have a valid immigration status permitting them to stay in the United States for long enough to pursue their claims in court.

Because of these conditions, temporary work visa programs have been dubbed “close to slavery,” and government auditors have noted that increased protections are needed for migrant guestworkers.15

Migrant guestworkers can be legally underpaid. To add insult to injury, there is abundantevidence that the laws and regulations governing major temporary work visa programs—such as H-2B and H-1B—permit employers to pay their guestworkers much less than the local average wage for the jobs they fill.16 And most work visa programs have no minimum or prevailing wage rules at all—maybe that’s why some employers think they can get away with vastly underpaying their guestworkers, as one Silicon Valley technology company in Fremont, California, did by paying less than $2 an hour to skilled migrant workers from India on L-1 visas who were working up to 122 hours per week installing computers.17

While employers are still required by law to pay guestworkers at least the state or federal minimum wage, that’s often far less than the true market rate, or the local average wage, for the occupation they’re employed in. The company employing the L-1 guestworkers in Fremont who were paid less than $2 an hour got in trouble because California law required that they be paid no less than $8 an hour (the state minimum wage at the time) plus time-and-a-half for overtime. But the average wage in Fremont for the job they were employed in—installing computers—was $20 per hour at the time according to U.S. Department of Labor data, and if they were also configuring the computers for the company’s network, they deserved to be paid $44 per hour.18 In the end, the company was required to pay back wages of $40,000 plus a fine of $3,500 “because of the willful nature of the violations”—a slap on the wrist considering the egregiousness of the wage theft and hardly a disincentive against future violations.19

In essence, these visa programs are intentionally designed to create a labor market monopsony for employers—awarding employers greater leverage over their workers20—and growing research has shown that even modest amounts of employer monopsony power are utterly corrosive to workers’ ability to bargain for better wages.21

Visa program rules make it easy for employers to avoid hiring U.S. workers in favor of exploitable and underpaid guestworkers. While two of the major U.S. work visa programs require that employers first recruit U.S. workers and offer them jobs before hiring guestworkers, the vast majority of the programs have no such requirement. That means that employers hiring through large work visa programs like the J-1, L-1, and H-1B can bypass the local workforce altogether when hiring migrant workers, regardless of whether the local area is experiencing high unemployment.22

Even when employers are required to recruit locally, many go to great lengths to avoid employing U.S. workers—preferring to hire guestworkers because they can be more easily exploited.23 As the New York Times, Washington Post, and Vox have reported, some of President Trump’s companies have taken measures to avoid hiring local U.S. workers so they can hire guestworkers.24

Oversight is lacking. There is also very little oversight of temporary work visa programs. Most of the programs have no rules in place at all to protect guestworkers after they arrive in the United States. Where such rules are in place, enforcement is woefully inadequate—and companies that are frequent and extreme violators of these rules are often allowed to continue hiring through visa programs with impunity.26

Considering how these programs operate and the situation they leave guestworkers in, perhaps it is no surprise that less-skilled legal guestworkers earn approximately the same low wages on average that unauthorized immigrant workers do for similar jobs, despite the fact that unauthorized workers have virtually no rights in practice.27 In other words, these guestworkers don’t have any financial incentive to work legally through visa programs since there is no wage premium for it—and, in fact, authorized guestworkers can end up worse off economically than unauthorized workers because of the debts they incur through fees paid to recruiters.

Summary and solutions

In sum, the bargaining power of U.S. workers is undercut when millions of unauthorized workers and guestworkers—6% of the U.S. labor force—are underpaid by employers and cannot safely complain to the Department of Labor or sue employers that exploit them.

The Trump administration has pushed a bigoted and xenophobic narrative that pits immigrants against native-born workers under the false premise that the economy is a zero-sum game with a fixed number of jobs. This leads to predictably foolish and cruel policies—such as more and bigger worksite raids by ICE—that don’t improve conditions for workers but only serve to increase the power employers have over workers.28 A better and more humane response starts from realizing how much of today’s immigration policy is driven by low-road employers who aim to benefit at the expense of both migrants and U.S. workers. From this perspective, one can see that improving labor standards for unauthorized immigrants and guestworkers will lift the floor for all workers, which will increase bargaining power and raise wages.

Granting lawful permanent resident status to currently unauthorized workers would raise their wages and improve labor standards for all similarly situated workers.

The most transformative solutions require congressional action. Congress should pass legislation granting lawful permanent resident (LPR) status to the current unauthorized immigrant population; this would include recipients of Deferred Action for Childhood Arrivals and those who currently have temporary protected status. Granting LPR status to workers without status would raise their wages and improve labor standards for all similarly situated workers.29 Even if unauthorized immigrants were not granted LPR status through legislation but were at least provided with federal employment authorization documents by the Department of Homeland Security, their wages would rise significantly and economic outcomes would improve overall.30

Congress could also reform temporary work visa programs by updating, simplifying, and standardizing the rules for all of them: first, by requiring employers to recruit and offer jobs to qualified U.S. workers, and second, in cases where employers can’t find U.S. workers, ensuring that all guestworkers are paid no less than the local average wage for the job and are not tied to one employer. Congress should also limit the time that guestworkers are in a temporary status by allowing them to self-petition for permanent residence after a short provisional period.31 And Congress should appropriate more funding to the Department of Labor to enforce this new system and audit employers,32 and pass laws permanently banning any employer from hiring through temporary work visa programs if that employer has violated immigration or labor laws.

Finally, Congress should prioritize reintroduction and passage of the Protect Our Workers from Exploitation and Retaliation (POWER) Act, perhaps the single most important piece of legislation aimed at protecting workers of all immigration statuses from the threat of employer retaliation and deportation. The POWER Act—last introduced in 2018 by Rep. Judy Chu (D-Calif.) and Sen. Robert Menendez (D-N.J.) and supported by various unions and migrant worker advocacy organizations—would expand access to humanitarian “U” visas for migrant workers who report workplace violations. (U visas are currently available to victims of certain qualifying crimes who are cooperating in a related investigation or prosecution;33 the POWER Act would increase the number of U visas available and extend eligibility to labor-related crimes.) The POWER Act would also strengthen the investigative powers of labor standards enforcement agencies. Finally, it would permit postponing the deportation of migrant workers who file a bona fide workplace claim or are a material witness to one, so they can remain in the country to pursue it; they would also be eligible for employment authorization so they can work during that time.34

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EPI is an independent, nonprofit think tank that researches the impact of economic trends and policies on working people in the United States. EPI’s research helps policymakers, opinion leaders, advocates, journalists, and the public understand the bread-and-butter issues affecting ordinary Americans.